According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker John Pelletier (Pelletier), previously associated with LPL Financial LLC, has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Pelletier recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on September 21, 2023.
Pelletier was named a respondent in a FINRA complaint alleging that he engaged in unauthorized trading by executing trades with a total principal value of $37,799 in a member firm customer’s IRA without the customer’s or an authorized person’s prior written or oral authorization or consent. The complaint alleges that the customer, a 62-year-old who was retiring, was the sole owner of the IRA and the only person authorized to direct trades in the account. The customer was identified as ‘single’ on the new account documents, and his ex-wife was identified as the primary beneficiary of the account. The only securities transactions in, or distributions from, the IRA were periodic distributions of $500 to be deposited every month in a checking account he held jointly with his ex-wife. Each of the unauthorized trades involved Pelletier selling one of two classes of shares of a mutual fund holding in the customer’s account in order to fund a redemption and distribution. Although the customer’s ex-wife was not an authorized party on the account, Pelletier executed each of the trades after receiving verbal instructions to process the redemption solely from the customer’s ex-wife. Further, the customer had not provided Pelletier or the firm with written authorization or a power of attorney authorizing his ex-wife to direct trading in the account. For each of the trades, Pelletier decided which class of mutual fund to sell in order to generate the funds requested by the customer’s ex-wife, without obtaining authorization or consent from the customer for the trades.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $51,550.00 on August 19, 2020.
Between May 2017 and November 2018, customer alleged that BHFA, through the RR, had allowed unauthorized distributions to be made from the customer’s Individual Retirement Account
In the financial industry advisors must meet the requirements of the SEC’s Regulation Best Interest (Reg BI) in providing investment advice and services. Reg BI established a ‘best interest’ standard for brokerage firms and registered representatives. This standard applies when a registered representative is providing investment advice through making recommendations customers and covers securities transaction, investment strategies, and recommendations concerning advice on opening of an account or accounts. This standard applies when a registered representative is providing investment advice through making recommendations customers and covers securities transaction, investment strategies, and recommendations concerning advice on opening of an account or accounts.
Another aspect of the care obligation is focusing on the client’s specific needs which brokers must reasonably understand through obtaining information for the client’s investment profile. In completing a customer’s investment profile the advisor should include information such as the investor’s investment time horizon; liquidity needs; risk tolerance; experience with various investment vehicles; investment objectives and financial goals; assets and debts including outside investment accounts; marital status; tax information; age; and other relevant information that may be individual to the investor that the advisor would need to know to properly render advice or provide services. The Reg BI rule applies a fiduciary principles and requires an associated person to act in the retail investor’s “best interests” while barring the broker from placing their own financial interests and compensation incentives ahead of the investor’s best interest. There are different sub-parts of the Reg BI rule that financial professionals must comply with when providing advice. Among those is the duty of care obligation that mandates associated persons to evaluate investment options, review and be knowledgeable the risks and rewards of the investment or service, compare alternative investment products, and ensure that the overall investment strategy aligns with the client’s goals and is in their best interests.
Next, the broker must understand the investor’s investment background and profile. A customer’s profile includes information that describes the investor’s financial situation and needs. Information here will include their outside securities accounts and investments; relevant assets and debts; tax bracket; age; liquidity needs; risk tolerance; investment time horizon; experience with investing; investment objectives; and any other relevant information that the investor may choose to disclose pertinent to their situation. Using the foregoing information, the associated person then must consider reasonably available investment option to accomplish the investor’s goals as well as alternative investment options that may be cheaper or other important qualities. Finally, the advisor must conclude that there is a reasonable basis to believe that the recommendation being provided is in the investor’s best interest. In addition to specific investments being recommended, under Reg BI, a broker must also understand the type of account that their client would need in order to meet their care obligations. The SEC has stated that the type of securities account an investor has can greatly affect a customers’ costs and overall investment returns. Further, different account types can offer and support different features, products, securities, or services, and account type would not be appropriately applied in a one size fits all manner.
Pelletier has been in the securities industry for more than 22 years. Pelletier has been registered as a Broker with LPL Financial LLC since 2021.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.